Vol. 5, No. 10  Join the Real Property Section  Contact Us  Archive • September 2010

Special Message

As we begin a new season of programs, I encourage you to review the list of upcoming events each month and plan to attend at least one in person to see first hand the additional benefit of professional networking that these sessions offer. During trying times such as these, networking becomes more than a pastime; it could become a survival skill.


Norm Chernin,
Editor, Real Property Section Newsletter
E-mail address: nchernin@firstam.com

Recent Cases
Cases from August 1 through August 31

Where member of board of directors of corporation that later went into bankruptcy attempted to assist the corporation by purchasing its real property, and trustee brought a fraudulent conveyance claim, district court erred when it determined that the value of the real property was its fair market value because bankruptcy court’s determination of value, which applied reductions based on a quick and bundled sale, was not clearly erroneous. Bankruptcy and district courts did not err in holding that board member was a good faith transferee and in reducing his liability by the value he paid for the property where board member entered the transaction to enable the company to survive and proposed a repurchase option to protect the company. Board member was entitled to a credit for the amount that his codefendants paid in a settlement agreement where member and the settling codefendants committed the same injury under California Code of Civil Procedure Sec. 877, and board member was entitled to credit in entire amount paid. Debtor’s repayment of a loan to a group, which included several directors, was not per se a preference where special circumstances tipped in favor of board member as a director-creditor.
In the Matter of JTS Corporation - filed August 10, 2010
Cite as 07-15970

Construction Law
Proposition 209, which prohibits public entities from awarding public contracts to discriminate or grant preferential treatment based on race or gender, does not violate the "political structure doctrine," a judicial interpretation of the federal equal protection clause that prohibits a state from imposing a political structure that invidiously discriminates. City’s affirmative action programs for contractors did not fall within Proposition 209’s federal-funding exemption where applicable federal laws merely permitted and did not require race- and gender-based preferential treatment. To prevail on its claim that its affirmative action ordinance was necessary to redress its own past violations of the Equal Protection Clause, and thus took precedence over Proposition 209 as a matter of supreme federal law, city was required to prove that it had purposefully or intentionally discriminated based on race or gender; that the purpose of the ordinance was to provide a remedy for such discrimination; that the ordinance was narrowly tailored to achieve that purpose; and that a race- and gender-conscious remedy was necessary as the only, or at least the most likely, means of rectifying the resulting injury--and where trial court did not apply that standard in ruling on motion for summary judgment, it was appropriate to do so on remand.
Coral Construction, Inc. v. City and County of San Francisco - filed August 2, 2010
Cite as 2010 S.O.S. 4449

Construction Law
Where defendant had a design services contract with a public entity, and plaintiff was its subcontractor, and contract between plaintiff and defendant contained an "agree-to-agree" provision requiring that an additional fee be negotiated in good faith if the scope of the project were expanded, plaintiff--being unsuccessful in its efforts to negotiate such a fee--was permitted to continue to work and reserve its right to subsequently obtain a judicial determination as to the value of the changes.
Ted Jacob Engineering Group, Inc. v. The Ratcliff Architects - filed August 23, 2010, First District, Div. Five
Cite as 2010 S.O.S. 4977

Construction Law
Public Contract Code Sec. 10506.7 requires only that a contract be awarded to the "best value contractor" for the work set forth in the contract, and not necessarily to the contractor making the best offer for a package of work including that set forth in the contract. University of California violated Sec. 10506.4(c)--which requires it to "adopt and publish procedures and required criteria that ensure that all selections are conducted in a fair and impartial manner" and to disclose to prospective bidders how the best value bid will be selected, including the bid selection procedure and the determinative factors in that decision--where it selected the bid packages based on undisclosed criteria and in a manner that allowed it to predetermine the outcome of the bid selection.
Schram Construction, Inc. v. Regents of the University of California (Southland Industries) - filed August 24, 2010, First District, Div. Five
Cite as 2010 S.O.S. 5018

Eminent Domain
While expenses incurred to mitigate loss of business goodwill after property is taken by eminent domain may be compensable under some circumstances, mitigation expenses are not compensable under Code of Civil Procedure Sec. 1263.510 if they constitute "moving expenses" or "reestablishment expenses" as defined by Government Code Sec. 7262 and California Code of Regulations, title 25, Sec. 6090. Defendants were not entitled to compensation where they did not demonstrate that claimed mitigation expenses were something other than "moving expenses" or "reestablishment expenses" as defined by those sections. Trial court did not err in enforcing a $5,000 per day penalty for not vacating premises to which the parties stipulated in an agreement where defendants failed to show that agreement was unconscionable. Defendants were not entitled to a jury trial on whether plaintiff waived the penalty where enforceability of the provision was not a compensation issue.
Los Angeles Unified School District v. Casasola - filed August 5, 2010, Second District, Div. Four
Cite as 2010 S.O.S. 4554

Environmental Law
City could not, under CERCLA, recover past wellhead treatment costs resulting from perchlorate contamination where it did not comply with national contingency plan (“NCP”). City’s failure to comply with NCP precluded declaratory relief with respect to future response costs.
City of Colton v. American Promotional Events, Inc.-West - filed August 2, 2010
Cite as 06-56718

Environmental Law
U.S. Fish and Wildlife Service (“USFWS”) did not err in designating about 850,000 acres of land as critical habitat for 15 endangered or threatened vernal pool species because there was no reason that two primary constituent elements essential for the conservation of a species need to be present in the same area; because there was no reason why the USFWS could not determine what elements were necessary for conservation without determining exactly when conservation would be complete; because overlap between occupied and unoccupied habitat designations did not run afoul of the statutory scheme; because the exclusion of certain developed areas from the critical habitat designation was not improper; and because USFWS was not required to undertake a "cumulative" assessment that would include an assessment of the costs of complying with other regulations.
Home Builders Association of Northern California v. U.S. Fish and Wildlife Service - filed August 9, 2010
Cite as 07-16732

Land Use
Mello Act and Coastal Act apply to a mobilehome park conversion within the coastal zone, and local authority must ensure compliance with those acts in addition to compliance with Government Code Sec. 66427.5, which deals with mobilehome park conversion generally.
Pacific Palisades Bowl Mobile Estates, LLC v. City of Los Angeles - filed August 31, 2010, Second District, Div. Four
Cite as 2010 S.O.S. 5152

Mortgage Loans
Plaintiffs who sued commercial mortgage lender for fraudulent misrepresentation could not rely on lender's knowingly false determination that they qualified for the loans as a determination by the lender that they could afford the loans.
Perlas v. GMAC Mortgage, LLC - filed August 11, 2010, First District, Div. Five
Cite as A125212

Property Management
Rules of a large regional shopping mall that prohibited peaceful, consensual, spontaneous conversations between strangers in common areas of the mall about topics not related to the activities of the mall, its tenants, or the noncommercial sponsored activities of the mall or its tenants were content-based rules that did not withstand a strict scrutiny analysis, and were unconstitutional on their face under state constitutional provision guaranteeing the right to free speech; even if rules were content-neutral, they would similarly fail intermediate scrutiny. Rules were also overbroad and vague, and trial court erred in finding that they were reasonable time, place and manner restrictions that were content-neutral, and in granting summary judgment on that basis.
Snatchko v. Westfield LLC - filed August 11, 2010, Third District
Cite as C059985

Real Property Taxation
Where commercial real property was owned by a trust, transfer of income beneficiary’s interest to his children upon his death constituted a change in ownership under Revenue and Taxation Code Sec. 60, entitling the assessor to reassess the property.
Phelps v. Orange County Assessment Appeals Board No. 1 - filed August 16, 2010, Fourth District, Div. Three
Cite as 2010 S.O.S. 4844

Real Property Taxation
In hearing an appeal from an assessment of a newly built, owner-occupied, single-family residence, appeals board violated Revenue and Taxation Code Sec. 167(a) by placing burden of proof on homeowner, rather than granting homeowner the benefit of a rebuttable presumption.
Farr v. County of Nevada - filed August 17, 2010, Third District
Cite as C061848

Title Insurance
Plaintiff, an investor in distressed real estate who allegedly relied on title company’s erroneous representations in deciding to bid on a particular parcel and sold at a loss as a result, could not state a cause of action against the company in the absence of a policy of title insurance or the purchase of an abstract of title.
Soifer v. Chicago Title Company - filed August 10, 2010, Second District, Div. Three
Cite as 2010 S.O.S. 4683

Title Insurance/Modification
Soifer v. Chicago Title Company - filed August 13, 2010, Second District, Div. Three
Cite as 2010 S.O.S. 4843


Reader Reactions
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Los Angeles County Bar Association
2010 Real Property Section Newsletter
Daniel L. Goodkin, Editor, Real Property Section Review
Norman A. Chernin, Editor, Real Property Section Newsletter

Pamela L. Westhoff

First Vice Chair
Gregg J. Loubier

Second Vice Chair
Theresa C. Tate

Treasurer/Crocker Chair
Sarah V. J. Spyksma

Norman A. Chernin

Immediate Past Chair
Michael S. Klein

Section Administrator
Terrina Scott


Eric Altoon
Nedra E. Austin
Babak B. Baradaran
Susan J. Booth
Claire Hervey Collins
Caroline Dreyfus
Brant Dveirin
Robert T. Flick
Daniel L. Goodkin
Marcia Z. Gordon

Linda S. Koffman
Trudi J. Lesser
Peter J. Niemiec
Robert C. Pearman
Leslie D. Reed
D. Eric Remensperger
Michael G. Smooke
Linda E. Spiegel
Andrew J. Yamamoto

Commercial Development and Leasing, Nadav Ravid
Construction Law, Richard Mah
Land Use Planning and Environmental Law, Laurence L. Hummer
Real Estate Finance, Owen P. Gross
General Real Estate Law, Brian R. Hochleutner
Title Insurance, Vanessa A. Widener

Readers are advised that changes in the law may affect the accuracy of this publication or the functionality of links after the publication date.